Borrow more money on mortgage

saajan_12

Overpaying by £A will increase your equity by £A plus save the interest on £A, so net 'profit' is more than £A (depending on how early you repay).

Spending £A on refurbishing may / may not increase the value of the property bu £A. If the renovations make the property appeal to a new market then you have the potential for higher offers. If it's cosmetic then a buyer is likely to prefer a cheaper unrenovated house which they can renovate to their taste. So unless there was enough of a market for people looking for a 'ready to move in house', I think it would be rare for £A of work to add MORE than £A to the value. .

Ultimately its whether the guarantee of adding atleast £A equity by overpaying is worth more than the chance of adding £A, likely less but the benefit of having the renovations while you still live there.

eddddy

You could try 'making friends' with 1 or 2 local EAs.

Ask them to do market appraisals of your house, as you're planning to sell in a year or two - and you want to know what refurbishment would add most value.

Many EAs are happy to do this as a 'business development' exercise. i.e. They give advice, and build up a business relationship with you, in the hope that you will eventually use their services.

Brock_and_Roll

We bought the house for £210k and the current valuation is £221k. We are thinking about borrowing more money on the mortgage (£30K) for home improvements

But that is not an option - no one is going to lend 240k on a property valued at 221k. (unless of course you have overpaid a huge amount in the last year)


The days of 100% mortgages are long gone thankfully, never mind 109% loans.

Crashy_Time

Brock_and_Roll wrote: »

We bought the house for £210k and the current valuation is £221k. We are thinking about borrowing more money on the mortgage (£30K) for home improvements

But that is not an option - no one is going to lend 240k on a property valued at 221k. (unless of course you have overpaid a huge amount in the last year)


The days of 100% mortgages are long gone thankfully, never mind 109% loans.

Yep, just pay off your debt ASAP IMO, before rates creep up, invest the money you would have spent on refurbishing in some liquid assets.

Ozzuk

You don't say how much your LTV is, this would be key for me, borrowing another 30k suggests its a very positive ratio.

I 'upped' my mortgage when buying my current property so I'd have more to invest in initial works, but it was still a positive picture in terms of LTV/equity. I was also confident I'd get the money back (unless Crashy is correct and it all goes bang!) and I wanted the house to look a certain way to live in.

But its always a gamble, you have to be confident you're adding more value than the cost, and that the market won't move against you.

Borrowing to do a general refresh with a view to increasing value for 6-7 years time is a bad idea. In 7 years time much of those improvements could need doing again. Kitchen now looks old, bathroom etc, walls. Styles change and things get damaged/wear out. Borrowing to flip a house quickly, sure, that's not a bad idea but you have to be good on the figures.